SALT LAKE CITY — A major demographic shift is underway in the U.S. with Gen Y — also commonly referred to as millennials— occupying a larger share of adults and the workforce.

According to the U.S. Census Bureau, Gen Y makes up approximately 24 percent of the U.S. population. By its sheer size, this generation will increasingly influence businesses and society as a whole. The old saying “demographics are destiny” is often repeated. This begs the question: What is our destiny?

Experiences matter

Shifting demographics will particularly affect businesses during the coming years. According to the Brookings Institute, millennials will make up close to 75 percent of the U.S. workforce by 2025. From my perspective as a commercial real estate analyst, the influence of this generation in the workplace is already being felt. As employers try to attract Gen Y, their preferences weigh heavily on businesses when deciding where to locate offices and how to design them.

How work is experienced matters to this up-and-coming generation and employers know it. Overall office environment, technology, access to transit and flexibility are key considerations for companies trying to attract the best and brightest young workers. As such, the workplace atmosphere, how offices look and their functionality will continue to evolve rapidly as this generation expands its footprint and influence.

Determined to make a difference

Beyond corporate real estate decisions, society as a whole is already experiencing the effects of Gen Y’s influence. For evidence, look no further than the political realm. A post-2012 election study by Tufts University revealed that four key states were won by President Barack Obama due to the youth vote. Had Mitt Romney won at least 50 percent of the youth vote in those four states, he would be president.

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Rivalries and opinions aside, while examining local commercial real estate markets, I and many of my colleagues have observed a significant amount of activity in Utah County, including particularly impressive activity in the northern part of the county.

As consumers, millennials utilize technology to find what they’re looking for and, again, place a high value on experiences. This will influence the way that new retail centers are developed and how goods and services are delivered. Additionally, these young consumers are more likely to support businesses that are aligned with their own values and priorities.

For example, Nielsen data show that over 60 percent of Gen Y consumers are willing to pay more for a product if it is environmentally friendly. This is evidence of a community-minded generation. In fact, the same research shows that 57 percent of millennials participated in volunteer work during the past year — surpassing all other generations.

Reports and analysis of Gen Y indicate that it is determined to make a difference. Due to its numbers, Gen Y will likely achieve much of the influence it craves in coming years.

There is much about this generation that provides reason for optimism. However, this is also a group that has passed through tough economic times at an early age. The experience of the Great Recession has created a heightened awareness of existing and potential financial challenges. A tough job market combined with higher student debt loads, even when adjusted for inflation, is complicating the ability of this generation to progress financially in the same way past generations have. So much so that prominent leaders like former U.S. Treasury Secretary Lawrence Summers are declaring this situation a macroeconomic issue that needs to be addressed.

The basic concern in this: around 70 percent of U.S. economic activity is associated with consumer spending and Gen Y may not be able to contribute to growth with the same levels of consumption as previous generations. Consequently, future economic growth could be subdued.

Opportunities

While issues surrounding Gen Y and the demographic shift are well noted in the media and among academics, they may seem like peripheral issues, but they’re not. Savvy employers understand the increasingly powerful effect this group will have on society and their businesses, and they are responding. Others will begin to catch on. This is occurring rapidly in the private sector where businesses depend on the resources of a young workforce.

However, the greatest impact is yet to come as more millennials assume positions of power and influence in the private and public sectors. There will be great opportunities for problems to be solved and progress to be made as this occurs, but as this generational shift progresses, it would be wise to consider the challenges these young adults are facing.

If not, opportunities will be missed and potential not realized. Like so many other challenges, outcomes are not preprogrammed. Exactly how this story unfolds is yet to be determined, but we can be assured it will be exciting and impactful.

Darin Mellott is a senior research analyst at CBRE, the world's largest commercial real estate services firm. He is also a member of the Utah Economic Council and sits on the board of directors for the Economic Club of Utah. He tweets at @DarinMellot

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